Systematic Investment Plan (SIP) - An Effective Method of Investment

Systematic Investment Plan (SIP) is a long term investment process that investing a fixed sum of money at regular intervals (monthly/quarterly) in a mutual fund scheme at the prevailing Net Asset Value (NAV).  As the investment is over a period of time, it eliminates the risk of timing the market.

      Mutual fund Companies collecting the amount from the publics and investing in shares, securities, gold etc. and making profit.  After charging some fees and returning the profit to the investors.  This is the basic principle of any mutual fund.  It is suitable for persons who  are not interested in taking high risk of share market.   

        The idea of SIP is averaging the purchase price.  Experience shows that SIP gives good return to long term investors.

 

Who can join?

  Any person who can save a fixed amount regularly.

 

Proofs required:

1.  A Bank account with cheque facility.

2.  Pan card.

3.  Photo Identity card.

4.  Address proof etc.

Features:

1.  Even with ` 500 can start investment.

2.  Formalities are simple.

3.  No need of knowledge of share market, trading etc. these are the head ache of fund managers.

4.  Long term investment gives more return.

5.  Can increase the amount of investment at any time.

De-merits :

        Mutual funds are subject to market risks and there is no assurance or guarantee that the objectives of the scheme will be achieved.  The NAV of the units can go up or low depends upon the market.  The performance of a fund does not indicate the future performance of the scheme.  The investor should be more cautious about the performance of the fund. 

More details can be had from Registered Stock brokers, Mutual fund Advisors, Banks etc.

•  Share your experiences, opinion etc through comment facility.

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